ECONOMIC THEMES (2016) 54(2): 281-300

DOI 10.1515/ethemes-2016-0014

IMPACT OF NATIONAL CULTURE ON

INTERNATIONAL HUMAN RESOURCE MANAGEMENT

Biljana Đorđević
University of Niš, Faculty of Economics, Serbia
biljana.djordjevic@eknfak.ni.ac.rs

UDC Abstract: In today's business conditions, the internationalisation of

005.96 business becomes an almost inevitable precondition for future growth
Review and development of organisations. However, internationalisation of
paper business usually requires organisations to implement some changes in
the way they operated in the previous period. One of the areas that
require some changes is the area of human resource management, too.
Factors which require modifications in this system are related
primarily to the legal regulations of other countries, but also to the
characteristics of their national culture. The former influence comes
from the fact that national culture exerts a powerful influence on the
system of values, attitudes and behaviour of people in a particular
country and, among the other things, on the preferences for policies and
procedures in the field of human resources management. Starting from
the above, this paper analyses the impact of certain dimensions of
national culture on the preferred content of human resources
management in organisations in certain countries. The aim of the paper
is to provide the theoretical basis for organisations that
internationalised their business, or intend to do so, to create system of
human resource management in the entities abroad which, at least, will
represent the balance between the system that is applied at
headquarter and one that is preferred in entities abroad, in order to be
effective.
Received:
Keywords: internationalisation, national culture, international human
22.09.2015.
resource, employees.
Accepted:
23.03.2016. JEL classification: F23, F53

1. Introduction

In today's business environment characterised by the process of globalisation

and extremely strong competition, a growing number of organisations a chance
for further growth and development seek in the process of internationalisation
of the business. However, entering at the international business scene carries a
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number of challenges. First of all, the expansion of business in other countries

require possessing knowledge about their legal regulations, the characteristics of
the local labour market, characteristics of the political and economic system, the
characteristics of the national culture, etc. These are the reasons which require
organisations that internationalize their business to implement certain
modifications in their former way of doing business and, among other things, in
the system of human resource management (HRM).
Since the national culture, as a system of deeply founded values, attitudes
and behaviours of the members of a society (Leung et al., 2005) to a large
extent determines the characteristics of other systems of the country (legal,
political, economic and others), it implies that the culture of observed countries
is one of the most important factors that must be taken into account in the case
of entering at the international business scene. Consequently, the national
culture becomes a very important factor when it comes to designing the content
of international human resource management (IHRM), too. The fact that
national culture is very important for the content of IHRM is clearly singled out
by the fact that within this concept a special segment, comparative human
resource management, which examines the differences in the content of HRM
between countries primarily caused by the characteristics of the national culture,
has emerged.
Having in mind the fact that national culture has influence on the preferred
style and the content of HRM in organisations of a certain country (Stone et al.,
2006), the aim of this paper is to show the connection between certain
dimensions of national culture and preferred policies and procedures in this
area. The initial assumption of the paper is that organisations when within the
framework of the internationalisation of business establish business entities in
other countries, should recognise the impact of national culture of the host
country when designing the content of IHRM in order to be effective.
The paper is structured as follows: firstly, it reviews the literature about the
concept of IHRM and the most known models of national culture formulated by
the referent authors from this field, then analyses the impact of dimensions of
the national culture on particular policies and procedures in the field of HRM,
while the last part analyses the impact of national culture of some countries on
the preferred content of HRM in them. In the paper the method of analysis,
synthesis, comparison and generalisation were used.

2. The Concept of International Human Resource

Management

As a result of business expansion beyond the borders of a country and the need
to manage geographically dispersed workforce of diverse cultural background,
 Đorđević /Ecomic themes, 54 (2): 281-300 283

within the field of human resources management intensively is developing a

special segment - international human resources management (IHRM). This
concept characterizes numerous specifics in comparison to the so-called
national human resource management, particularly the need of organisations
that have internationalized business while designing the policies and procedures
from the area of human resource management to take into account the
specificities of the local area. 1
When we speak about what IHRM really means, the referent literature
provides us many answers. For example, Briscoe and his associates (2009)
under IHRM assume studying and implementing all activities from the field of
HRM that have an impact on the process of human resources management in
organisations in the global environment (Briscoe et al., 2009, p. 20). Scullion
(2005), for example, believes that IHRM represents the way in which
multinational companies (MNCs) manage their geographically dispersed
workforce trying to gain competitive advantage in the local and global level
through the human resources (Scullion, 2005, p. 5). Furthermore, Gomes (2012)
believes that the IHRM is the process of acquiring, allocation and effective use
of human resources in international business (Gomes, 2012, p. 2). Similar
opinion has Taylor and his associates (1996), who point out that IHRM is a set
of activities, functions and processes aimed at attracting, developing and
retaining human resources in the MNCs, i.e. set of activities that are used to
manage employees in MNCs both in the country and abroad (Teylor et al.,
1996, p. 960).
From the above it can be concluded that in understanding the essence of the
concept of IHRM there are no major differences. Also, it can be concluded that
this area is of a great interest. Consequently, the literature from this field is very
rich, and within this concept three specific areas can be clearly distinguished
(Brewster et al., 2007):
• Cross-cultural management,
• Comparative human resource management and
• International human resource management.
Authors dealing with cross-cultural aspect of IHRM base their research on
the fact that each country has its own unique set of deep-based values and
beliefs that are reflected in the way the people in that country think and behave,
and how that society functions in general. The authors that belong to this field
believe that understanding these differences is crucial for organisations with
internationalized business in order to adequately design the activities in the area

1
The obligation for every company is to implement legislation rules that applies in the host
country. However, the extent to which other specifics really will be taken into account will
depend on the strategic approach of IHRM that MNC adopted. These approaches can be:
ethnocentric, polycentric, regiocentric or geocentric approach.
284 Đorđević/Economic themes, 54(2): 281-300

of IHRM, such as recruitment, selection, training and development,

performance measurement, staff remuneration, etc.
Within the area of comparative human resource management two key areas
of research could be identified. The first area is related to the differences in the
content and preferred style of HRM between countries, while the second area of
research is related to the study of differences in the content of HRM within one
MNC which has its entities in different countries.
International human resource management, as the third area of study within
the IHRM, deals with the way in which organisations that have
internationalized their businesses manage human resources in entities abroad.
The authors in this field focus on those parts of HRM which had to be modified
due to entering companies at the international business scene.
The foregoing shows that in all segments of the concept of IHRM national
culture has an important place and that the specifics of IHRM, comparing to the
national HRM,are largely based precisely on the impact of the characteristics of
this variable. Therefore, in the following text the national culture and its
dimensions observed from the perspective of the referent authors from this field
will be discussed.

3. Dimensions of National Culture as a Basis for Designing

International Human Resource Management

About what is meant by national culture there are many answers. However,
most authors when defining national culture as a category base their opinion on
the definition formulated by Gerhart Hofstede. The aforementioned author
believes that national culture is a kind of mental programming, or patterns of
thought, feeling and action that each person acquires in childhood, and then
applied throughout life (Hofstede, 2001, p. 25).
National culture is the category which is very much studied, among the
other things because of the fact that it is a convenient tool for explaining many
phenomena in management, such as leadership style, organisational structure,
motivation, etc. (House et al., 2004; Hofstede, 2001). However, this concept has
also been proven to be a suitable tool for clarifying the difference in preferred
content of HRM between members of different countries.
The first authors who studied the national culture through certain
dimensions were Kluckhohn and Strodtbeck (1961). These authors believe that
the dimensions of national culture, in fact, reflect the fundamental issues that
every society faces with (Kluckhohn & Strodtbeck, 1961). They pointed out that
on each fundamental question there are three possible answers, which reflect the
differences in the characteristics of national cultures of different countries. The
 Đorđević /Ecomic themes, 54 (2): 281-300 285

overview of fundamental questions, i.e. dimensions of national culture, as well

as the possible answers to these questions according to Kluckhohn and
Strodtbeck are given in Table 1.

Table 1 Dimensions of national culture according to Kluckhohn and Strodtbeck

The fundamental question /

Dominant belief
dimensions of national culture
People by nature are good.
Understanding human nature People by nature are evil.
People by nature are neither good nor evil.
People can and should master nature.
The relationship with nature People must subjugate nature.
People should achieve harmony with nature.
People should strive to achieve specific goals and
accomplishment.
The nature of human activity People should strive do develop themselves into
integrated whole.
People should focus on living at the present moment.
Individualistic - the advantage has own interests.
Collateral - primacy have small groups and care for
Relationship among individuals them.
Lineal - relations between people are based on the
relationships of dominance and subordination.
Past.
Time orientation Present.
Future.
Private.
Understanding the space Public.
Mixed.
Source:Kluckhohn, F. R. &. Strodtbeck, F. L (1961).Variations in value orientations.
Evanston: Row, Peterson. (Quoted in Hills, M. D. (2002). Kluckhohn and Strodtbeck's
Values Orientation Theory.Online Readings in Psychology and Culture,
4(4).http://dx.doi.org/10.9707/2307-0919.1040).
One of the most famous models of national culture is the model formulated
by Gerhart Hofstede (1980). The aforementioned author firstly found that there
are four key dimensions according to which national cultures differ, and later
added a fifth one (time orientation) (Hofstede, 1980; Hofstede & Bond, 1984).
Dimensions according to which national cultures differ aforementioned author
found in the extensive study conducted while he was employed as a
psychologistat IBM. This study included 117,000 employees of the company
who were employed in more than 40 countries. Review of the national culture
dimensions according to Hofstede is given in Table 2.
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Table 2 Dimensions of national culture according to Hofstede

Dimension of national
Content
culture
• Low - power is dispersed in society and people see
themselves as equal.
Power distance
• High - society accepts (approve) the unequal distribution
of power.
• Low- people are tolerant of risk and different/alternative
options.
Uncertainty avoidance
• High - people feel fear and embarrassment when they find
themselves in unusual situations.
• Individualism - connections between people are weak; it is
expected that everyone takes care of his/her own interests
Individualism vs. and the interests of his/her immediate family.
Collectivism • Collectivism - people from the birth are integrated into
cohesive groups which provide lifelong protection in
exchange for loyalty.
• Masculine values – there is a strong tendency for
achievements; awards and recognitions are the main
motivating factors of behaviour.
Masculine vs. feminine
• Feminine values - the emphasis is on the quality of life,
values
sustainable development of society, the balance between
private and professional life; there are no differences
between women and men in the same positions.
• Long-term orientation - people values tradition, they are
patience and persistence to achieve results that will be
Long-term vs. short-
manifested in the long run.
term orientation
• Short-term orientation - focus is on the present and the
near future.
Source:adapted according to Hofstede, G. (1983). The cultural relativity of
organizational practices and theories.Journal of International Business Studies, 14 (2),
75-89 i Hofstede, G. & Bond, M. H. (1984). Hofstede's Culture Dimensions: An
Independent Validation Using Rokeach's Value Survey.Journal of Cross-Cultural
Psychology, 15 (4), 417-433.
Extensive research of the dimensions of national culture was also conducted
by Fons Trompenaars and Hampden-Turner (1997). The study, which lasted
over 10 years, and by which has been covered more than 1,500 executives from
28 countries, the aforementioned authors found that there are seven dimensions
by which national cultures differ. These dimensions are as follows (Table 3).
Project GLOBE (Global Leadership and Organisational Behaviour
Effectiveness) is also a very ambitious research project in the field of the study
of culture, conducted in the 1990s of the 20th century. The goal was to
determine whether and which dimensions of leadership are caused by the
characteristics of the national culture. This project included over 17,000 middle
managers from 62 countries. According to the researchers of the project
 Đorđević /Ecomic themes, 54 (2): 281-300 287

GLOBE there are nine dimensions of national culture, such as: power distance,
uncertainty avoidance, human orientation, institutional collectivism, intragroup
collectivism, determination, gender equality, orientation towards the future,
focus on performance (House et al., 2004).

Table 3 Dimensions of national culture by Trompenaars and Hampden-Turner

Dimension of
Content
national culture
• Universalism - there is a belief that certain principles and rules
Universalism vs. are the best and should be applied in all situations or countries.
particularism • Particularism– emphasizes the uniqueness and the need of
taking into account the specificities in all spheres of life.
• Individualism - interests of the individual and his/her family are
Individualism vs. above the group interests.
communitarianism • Communitarianism – interests of the group have priority.
• Neutral- people try to control their emotions and to demonstrate
Neutral vs. poise and composure.
emotional • Emotional - individuals are not reluctant to express their
deepest emotions.
• Specific- people clearly separates public and private life and the
roles that have in their lives, where these roles do not influence
each other.
Specific vs. diffuse • Diffuse - the difference between private and public life is not
clear; the roles of people, public and private, are not separated
and the individual is seen as an integral person.
• Achievement - peoples` worth is evaluated on the basis of
personal competences and outcomes that are the result of
Achievement vs. individual work and achievements.
ascription • Ascription- peoples are valued according to personal
relationships and family heritage.
• Sequential time culture -time is viewed as a resource so it tends
to be used in the most efficient way; there is no clear line
between the time dedicated to work and other activities.
Time orientation • Synchronic time culture - there is a clear distance between work
and pleasure; relations between people are much more
important than strict adherence to the agenda, protocol, etc.
• Internal directed culture- people believe that they can influence
Internal direction and control their environment (and their destiny).
vs. outer direction • Outer directed culture- people believe that they cannot
influence neither the environment nor on their own destiny.
Source: Trompenaars, F. & Hampden-Turner, C. (1997). Riding the Waves of Culture:
Understanding Cultural Diversity in Business (2nd ed). London: Nicholas Brealey
Publishing. (quoted in Vance, M. Ch. & Paik, Y. (2006). Managing a global workforce:
challenges and opportunities in international human resource management. New York:
M. E Sharpe, Inc.).
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It can be concluded that the researchers in this project have been adopted
the dimensions of culture as they have been formulated by the previous authors.
However, their contribution is reflected in the fact that they found that there are
some dimensions of leadership that are important to its effectiveness in different
cultures, i.e. there are dimensions of leadership that differently affect the
effectiveness of leadership in different cultures (Janićijević, 2013, p. 584).
In addition, it is important for the design of policies and procedures within
IHRM to know the dimensions of the national culture of a certain country, it is
important to bear in mind the fact that the characteristics of the culture of a
certain country are not static, but dynamic category which can change during
the time. These changes can have two directions: (a) reducing the cultural
differences between different countries, which is known as cultural convergence
and (b) the deepening of differences, which is known as cultural divergence
(Thomas, 2008).
A factor that specially contributed to the cultural convergence is the process
of globalisation. However, besides the fact that globalisation significantly
contributed to the cultural convergence there are many other factors which also
contributed to cultural convergence, such as developing the mass media,
migration of people in order to acquire education or for economic reasons, etc.
These phenomena indicate that certain norms of behaviour, way of thinking and
values combine with others, and as a result a mixture of different cultures
appears. So, it happens that many traditional collectivist culture accept a certain
individualistic norms of behaviour and, conversely, individualistic culture
accept certain norms of behaviour from collectivist cultures.
In contrast to the cultural convergence there is an opposite phenomenon -
cultural divergence. This phenomenon implies that the cultures over time
become more and more distanced and that their characteristics become more
and more diverse (Vance & Paik, 2006).
However, in the literature there is almost a consensus that cultural
convergence and cultural divergence are extremes, i.e. that they are
phenomenon which are located at the opposite sides of the continuum. In the
reality what really happens is the process of crossvergence (Ralston et al.,
1997). There is the expectation that this trend (crossvergence) will continue in
the future and will be increasingly strengthened by the process of globalisation.
In order to investigate the influence of the culture of a specific country on
the HRM system in organisations of that country and to analyse its implications
for the content of IHRM, it is important to bear in mind that besides the
dimensions of national culture of the country concerned, HRM system in
organizations is also influenced by the organizational (corporate) culture. The
question that naturally arises here is: What culture, national or organisational,
has a greater influence on the attitudes and behaviour of the employees in a
 Đorđević /Ecomic themes, 54 (2): 281-300 289

particular organization? Most of the authors believe that the greater influence on
the behaviour and attitudes of employees in particular organisation, and also on
the preferred content of HRM, has a national culture. As the argument for such
an opinion, authors state that people establish their organisational values after
their nationally based values have already been developed, and that they their
existing system of values transfer to the organisation. On the other hand, if there
are discrepancies between the values that promote national culture and the
values that promote the founder of the organisation, authors believe that the
impact of organisational culture on the employees` values, fundamental
attitudes and beliefs is weaker in comparison to the influence of the national
culture. Authors also believe that the influence of organisational culture on the
attitudes and behaviour of the employees is of a shorter duration (Triandis,
1995). This suggests that national culture has a strong influence on which
policies and practices in the field of HRM in a particular country will be more
preferred and generally more prevalent.

4. Influence of Some Dimensions of National Culture on the

Content of Human Resources Management

The influence of national culture on the content of the HRM can be monitored
and analysed in almost all its segments. However, the following text will
analyse how certain dimensions of national culture exert their influence on key
activities in this field, such as: recruitment and selection of candidates, training
and development of the employees, performance appraisal and remuneration.
Regarding the influence of national culture on the recruitment of candidates
this impact can be analysed how national culture affects this process through the
system of values of the recruiters, but also through the system of values and
preferences of the job applicants (Stone et al. 2007). Stone and his colleagues
(2007) concluded that if recruiters come from countries with collectivistic
values, in that case it is more likely that the priority will be given to the personal
or relationship-oriented recruitment sources, such as employee referrals,
networking at job fairs etc. In contrast, when recruiters belong to countries
where individualistic values are dominated aforementioned authors believe that
the recruiters in this case will opt for recruitment sources such as employment
agencies, newspapers advertisements, online recruiting, or sources where
personal acquaintance and personal contacts are not of great importance (Stone
et al., 2007).
It is also believed that the system of values of the applicants can influence
the process of recruitment by deciding for which job to apply. If the applicants
support the individualistic values there is an assumption that they would prefer
jobs and organisations where they will be able to express their personal
achievements and quality, or jobs that offers a significant degree of autonomy
290 Đorđević/Economic themes, 54(2): 281-300

and opportunity for advancement. On the other hand, if the applicants have
collectivistic values, Stone and his colleagues (2007) state that it is more likely
that such applicants will apply for jobs that will allow them to work in a team,
and to cooperate with others.
Rieche and colleagues (2012) also state that national culture exerts some
influence on the process of recruitment. They state that in collectivist cultures
organisations prefer firstly to look for individuals for the vacant position within
the organisation (internal recruitment) in order to encourage loyalty and
commitment of the existing employees (Rieche et al., 2012). In support of the
preference for internal recruitment in such cultures, some other authors also
state that if some applicants come from the external labour market later they
have difficulties to fit into the work environment and develop social relations
with other employees, and even face with some kind of resistance (Björkman &
Lu, 1999).
National culture, may also influence the process of selection of applicants in
several ways: through the profile of the ideal applicant, selection criteria and
methods of selection. So, for example, in the USA, whose culture is
individualistic and characterised by individual orientation towards
achievements, efficiency and rationality, organisations prefer job applicants
who support individualistic values, who are focused on results, who are
proactive and can autonomously perform tasks (Stone et al. 2007). On the other
hand, if it is about collectivist culture, then the profile of the ideal job applicant
is different - priority is given to the applicants who are willing to work in a team
and who subordinate their own goals to the goals of group or organisation.
Regarding the impact of national culture on the selection process Aycan
(2005) states that in cultures that are high performance oriented organisations in
the selection process mostly use hard criteria, such as job related knowledge and
technical skills, while the organisation which are low performance-oriented
favor soft criteria, such as relational skills, or even belonging to a certain social
class (Aycan, 2005).
The influence of national culture can be recognised when it comes to the
usual methods of selection, too. For example, in cultures that are characterised
by high risk avoidance, organisations use a wide range of methods in order to
gather enough information upon which will be based valid decision. Also, in
cultures that are highly performance-oriented the methods that are standardized
and closely linked to the job requirements are used to a much greater extent.
The influence of national culture is also recognised when it comes to
training and development of the employees. For example, in high power
distance cultures where coaches have great authority, the communication
between them and the trainees is very formalised. Furthermore, the influence of
culture can be recognised when it comes to the design of the training
 Đorđević /Ecomic themes, 54 (2): 281-300 291

programmes. In which direction can go this impact, it can be seen from the
results of the study conducted on the population of students in the USA who
come from different countries and cultures. Research has shown that the Anglo-
Americans (individualistic culture) prefer training programmes that are
individualised and goal oriented (focused on the realization of precisely defined
tasks and goals) and where the learning environment is competitive. On the
other hand, when it comes to students who come from countries in Latin
America (collectivist cultures), it was found that they prefer unstructured
learning methods, informal environment during the training programmes,
followed by training methods that group oriented, as well as training methods
that allow active participation and experimentation (McIntyre, 1996 in Stone et
al., 2007). Another study showed that students from Asia (collectivist culture)
prefer formal training sessions, training methods that are group oriented,
cooperative learning environment, etc. (Chi-Ching & Noi, 2001 in Stone et al. ,
2007). From the above arises the message that in order to create effective
training programmes, it is necessary to design them in accordance with the
preferences of the trainees which are substantially based on cultural values of
the country of origin.
Culture can also affect employees performance appraisal system. This
influence can be identified at each stage of this process. Stone and his colleges
(2007) indicate that the values endorsed by the members of particular national
culture, first of all, affect the criteria which usually are used for measuring the
performance of the employees, methods that are used to measure employees`
performance, as well as the methods that are used to provide employees with
feedback (Stone et al., 2007). In explaining how cultural values influence the
performance appraisal system these authors state that there are two types of
criteria usually used in performance management systems: (a) task performance
and (b) contextual performance criteria. These authors suggest that if it comes
to the individualist culture that is more likely to be used task performance
criteria. In this case, employees` performance will be compared to the
performance standards, tasks and responsibilities determined in job description.
On the other hand, if it is about collectivist culture, then the contextual
performance criteria will be more used, i.e., the successfulness of the employees
will be appraised by how successful they are in cooperation, innovativeness,
providing assistance to others, etc. (Stone et al., 2007). In short, when it comes
to the individualist culture, the emphasis in evaluating performances is on the
individual performances, while in collectivist emphasis is on teamwork and
group results.
Dimensions of national culture have some influence on the appraisal system
in terms of subject of the appraisal, too. For example, in high power distance
cultures superiors require loyalty and obedience of his/her subordinates, so
when it comes to assessing the performance of the employees performances that
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are evaluated are based on the behaviour of the employees, not on the results
they achieved. Therefore, there is a belief that in such system, it is enough to
monitor the work of the employees in terms if they meet the prescribed
procedure to be evaluated positively.
Some dimensions of culture have an impact on the preferences when it
comes to the methods that organisations use for appraisal purposes. Thus,
certain studies suggest that the in individualist cultures it is more likely that a
formal and individual appraisal system will use objective, while in collectivist
cultures it is informal and subjective appraisal system (Stone-Romero & Stone,
2002). Furthermore, some research suggests that when it comes to feedback
interview, in individualist cultures, employees sometimes respond negatively,
i.e. they express anger, and even a tendency toward a kind of revenge to the
feedback agent in order to protect their integrity. On the other hand, in Japan
(collectivist cultures) employees on the negative appraisal also react with
emotions, but the dominant emotion is not anger, but shame because they did
not achieve satisfactory performances (Stone-Romero & Stone, 2002).
In other research it was found that the impact of culture can be recognised
when it comes to the way of communication during the feedback interview, as
well as what is the focus of the communication. It has been found that in
individualist cultures appraisals are usually communicated by direct talking
with employees, whereas in collectivist cultures feedback is usually given
indirectly through some kind of friendly conversation (Hofstede, 1983).
Regarding the content of the feedback, some studies have shown that in
individualist cultures focus is on how employees to improve their performance
in order to make progress in their career, whereas in collectivist cultures, this is
not the case, since in them progresses in career is usually based on the years of
employment (Milliman et al., 1998).
Culture, as a system of values and rules of behaviour may affect the
compensation system, too. That impact goes so far that the word compensation
that is used to indicate the rewards that employees receive in return for their
work, has a different interpretation in different cultures. For example, in most
European countries, this term is considered more as a repayment for injury or
damages, so in this countries the term remuneration is more preferred (Vance &
Paik, 2006).
When it comes to compensation system the influence of national culture can
be most apparently recognised in the area of designing the compensation
package. Thus, in individualist cultures, it is commonplace that compensation
depends on the performances of the individuals, while in collectivist cultures,
this is usually not the case. In collectivist cultures, salary is usually fixed and if
there is a variable part, it is usually based on the group or team performances.
Further, the dimension of uncertainty avoidance also has its implications for the
 Đorđević /Ecomic themes, 54 (2): 281-300 293

compensation system. Thus, in cultures with a high degree of uncertainty

avoidance compensation packages are structured in a way that small part
depends on performances, because this is a way to provided certainty and
predictability in payments to employees. In contrast, in cultures with low risk
avoidance compensation packages are generally structured so that greater share
is variable and depends on the results that have been achieved (Chiang, 2005).
Culture dimension such as masculine vs. feminine values, has also its
implications for the design of the compensation system. Thus, in cultures where
dominate masculine values employees prefer rewards such as money, promotion
and etc., while in the cultures where dominate feminine values, there are
preferences towards intangible rewards (e.g. job security, recognition, etc.).
Knowing the impact of certain dimensions of national culture on the
preferred content of HRM in a particular country is very important for MNCs
when designing their system of IHRM. If MNC implements management
system which is not in the line with generally accepted values and rules of
behaviour in a specific country, employees in that entity of MNC dissatisfaction
with such system can expressed through low level of commitment and
motivation as well as through unsatisfactory performances. Therefore, it is
necessary that MNC creates such system of IHRM that at least will be a balance
between the policies and procedures advocated by headquarters and those that
are preferred in entities abroad.

5. Impact of Dimensions of National Culture on the Content of

Human Resource Management in Some Countries - Cases of
Japan, USA, Turkey and Serbia

Having in mind that dimensions of national culture have some influence on the
preferred content of the HRM system in organisations of the certain country,
hereinafter will be analysed examples of Japan, the USA, Turkey and Serbia.
More precisely, the author will analyse how dimensions of national culture of
these countries affect the HRM system in their organisations.
Japan. One of the main characteristic of the national culture of Japan is
collectivism. How collectivism is strong, or how individualism is weak, it can
be concluded upon the results that Hofstede obtained. This author found that the
index of individualism of Japanese culture is 46, while, by comparison, in the
US, this index has value 91 (Hofstede, 1997). Strong collectivistic orientation in
Japan can also be seen on the basis how people in this country understand the
basic group to which they belong. Namely, in Japan, as a member of one`s
basic group (which typically include spouses and children) is also consider
organisation in which one works (Tayeb, 2004).
294 Đorđević/Economic themes, 54(2): 281-300

In addition, national culture of Japan is not only characterised by

collectivism, it is also characterised by masculine values, pursuit for
achievements, willingness to hard work and sacrifice. In addition, the national
culture of this country is characterised by high uncertainty avoidance, too. This
is one of the reasons why most organisations in this country, despite all the
turbulence in the labour market, still offer lifelong employment in exchange for
loyalty and adequate performances. Among the other characteristics of national
culture of Japan that should be mentioned is the orientation towards harmony. It
reflects the orientation of avoiding conflicts, achieving harmony and
establishing cooperative relations. In addition, the culture of Japan is also
characterised by very strong respect for social status. This dimension of culture
in everyday life manifests itself in numerous ways, such as, for example, the
depth of the slope during the meeting, the way in which seating at the table is
organised, the time that individuals are allowed to speak in the group, etc.
Main characteristics of the HRM system in organisations in Japan which are
culturally grounded are as follows (Tayeb, 2004):
• Teamwork: multi-skill work teams, team appraisal and reward.
• Collective decision-making.
• Discreet performance appraisal.
• Life-time (long-term) employment for regular core employees.
• Seniority-based pay and promotion.
• Strong sense of obligation to colleagues and superiors, however to a certain
extent discrimination against women.
• Commitment to high quality.
• Loyalty and long-term commitment to organisation, etc.
United States of America. Hofstede (1997) in his research found that one of
the main characteristics of the national culture of the United States of America
(USA) is individualism. This dimension of national culture of USA manifests
itself in many ways. For example, members of this culture believe that every
individual shapes and controls his/her own destiny. In addition, people are very
ambitious, independent and put high value on freedom and individual
achievements. In addition to individualism, the national culture of the USA is
characterised by a low power distance (index 40). This dimension of culture
manifests by advocating egalitarianism - attitudes towards people are not based
on differences in status, age and the like. Furthermore, the USA national culture
characterizes supporting masculine values (index 62). This dimension of culture
manifests itself in a way that there is a strong tendency for achievements. An
important characteristic of USA culture is also high tolerance of uncertainty
(index 46) (Hofstede, 1997). This characteristic means that people in this
country generally support changes and are motivated for entrepreneurship
behaviour.
 Đorđević /Ecomic themes, 54 (2): 281-300 295

The other characteristics of the national culture of USA include

ethnocentrism and orientation towards future. Ethnocentrism manifests in a way
that there is a strong belief that their system of values is superior than the others
(Tayeb, 2004). As a result of orientation towards future in the USA generally
dominates attitude that current ways of operation and functioning can and
should always be replaced by better ones.
The implications of these dimensions of national culture of USA on the
dominant characteristics of HRM system in this country, manifest in the
following way (Tayeb, 2004):
• Promotion and reward are based on merits not on the status, age and the
like.
• Preference towards participative leadership style.
• Employees are willing to make decisions, take initiative, build their image
and demonstrate entrepreneurial behaviour.
• Subordinates have freedom to question authority of the superiors.
• Employees are willing to leave the organisation in order to build their
careers and achieve greater success.
• Organisations easily decide to lay off employees.
• Problems with employees prefer to be solved through HRM system that is
seen as a means to avoid the need for union organizing.
• A high degree of professionalism, etc.
Turkey. Basic dimensions of national culture of Turkey are collectivism,
high degree of uncertainty avoidance, high power distance, equal level
of masculine and feminine values (Hofstede, 1997). Also this is a highly
contextual culture (Tayeb, 2004). However, studies conducted recently show
that certain dimensions of Turkish national culture, such as collectivism have a
high degree of uncertainty avoidance and high degree of power distance are
somewhat relativised (Ayacan, 2001). Having in mind the geographical position
of Turkey this tendency is not surprising.
Dimensions of national culture of Turkey have the influence on HRM
practices in this country in the following ways:
• There is a large power distance between superiors and subordinates,
although some managers express a high degree of tolerance, and empathy.
• Autocratic leadership style is increasingly relativised.
• Managers are high achievement-oriented but low power-oriented,
• There is still inequality in the decision-making process.
Serbia. Basic dimensions of Serbian national culture are collectivism, high
power distance, uncertainty avoidance and the balance between masculine and
feminine values (Hofstede, 2002). An important dimension of Serbian culture
is, above all, collectivism. How collectivism is strong or how individualism is
296 Đorđević/Economic themes, 54(2): 281-300

low may be concluded according to the value of the index of individualism (25).
Furthermore, Serbia is a very strong power distance culture which indicates the
value of this index, too. According to the research conducted by Hofstede this
index is 86. However, dominant dimension of national culture in Serbia is
uncertainty avoidance since this index has value 92. When it comes to
masculine and feminine values, in Serbia they are almost equally represented.
Index of masculine values is 43 (Hofstede, 2002).
In the absence of the empirical studies in which correlation between certain
dimensions of national culture of Serbia and the content of HRM system that is
applied in the organisations in this country, can be identified, certain theoretical
studies, however, suggest that the above-mentioned dimensions of national
culture of Serbia affect that the most common procedure and practice in the
field of HRM in Serbian organisations to be as follows (Bogićević Milikić,
2009):
• Due to high uncertainty aversion, in filling the senior managerial positions,
the priority is given to internal recruitment, while when it comes to filling
junior management positions the advantage has the external recruitment. In
the case when mid-level managers recruit from external sources, due to high
risk aversion organisations usually seek the assistance of consultants.
• High degree of collectivism affects that preferred methods of recruitment
are recommendations of existing staff, various events (seminars, symposia,
etc.), job fairs, etc., rather than recruitment by newspapers adds or by e-
recruitment.
• Due to a high degree of collectivism and risk avoidance the organizations in
Serbia when advertising the need for filling the vacant positions stress that
job involves teamwork, interaction with others, security and so on, rather
than possibilities of individual achievements (although this situation is
changing in favor of individual achievements - B. Dj.).
• When it comes to the selection process, high power distance, high degree of
collectivism and feminine values are not often standardised, and are based
on the recommendations of someone who is already a member of the
organization, unstructured interviews and informal conversation with the
candidate. In these circumstances, the most common selection criteria are:
personality traits (the impact of feminine values), education (the impact of
high power distance), loyalty and harmony in the organization (the impact
of collectivism).
• When it comes to the promotion, high degree of collectivism and high
power distance imply that it is realistic to expect that in Serbian
organizations basic criteria for advancement are good interpersonal
relations, years of service, loyalty and commitment to the organization.
Finally, high degree of collectivism and high risk aversion lead to the
conclusion that preferred reward system in Serbian organization is one where
 Đorđević /Ecomic themes, 54 (2): 281-300 297

salary is fixed, i.e. independent of the achieved performances, or at least that its
major part has fixed character.

6. Conclusion

Having in mind the fact that business expansion beyond the borders of a country
becomes precondition for the organizations` further progress, but also for the
development of the national economy as a whole, as well as that the number of
organizations that operate at the international business scene increase, this paper
deals with one of the biggest challenges of the process of internationalisation of
business. That is the creation of adequate human resources management system.
This is a challenge because employees who are employed in the entities abroad
usually have different cultural background. This paper points out that although
the content of the IHRM system is caused by a variety of factors from the
international context, the national culture is of a particular importance since this
factor has impact on a deeply based way of thinking, attitudes and behaviour of
people. As a result, it is natural to expect that employees from different
countries exhibit different preferences for policies and procedures in this area.
While some HRM practices may consider adequate and appropriate, others may
be considered inappropriate or even the unnatural. Since the employees
dissatisfaction with IHRM system can be expressed through low level of
organizational commitment and low level of performances, organizations when
design HRM system that is going to be implemented in the entities abroad, this
system, at the very least, should be a compromise between the system of values
and standards of behaviour for which headquarter of the organization is stands
for, with a system of values and norms of behaviour that local population prefer.
To highlight a clear link between certain dimensions of national culture and
preferred policies and procedures in the field of human resources management,
this paper firstly pointed out the essence of the concept of IHRM as well as its
main segments. It was noted that the basis of all segments of IHRM is culture. It
was also noted that culture is the factor upon which in the case of the
internationalisation of business should be paid special attention. Further, the
dimensions of national culture are observed from the perspective of the referent
authors in this field are presented. Their effects on the policies and procedures
in the field of HRM are also analysed. In the last part of the paper four countries
were selected and key dimensions of their national cultures were analysed, as
well as how these dimensions influence the content of HRM in these countries.
Although this paper has its limitations, which is primarily reflected in the
lack of the empirical research that will confirm the causal relationship between
the dimensions of particular national culture and policies and procedures in the
field HRM that are appropriate for organisations of that country, it can serve as
a kind of guidance for the management who plans to internationalize the
298 Đorđević/Economic themes, 54(2): 281-300

business which factors should be taken into account in order to create an

effective IHRM system.

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UTICAJ NACIONALNE KULTURE NA MЕĐUNARODNI

MENADŽMENT LJUDSKIH RESURSA

Apstrakt:U današnjim uslovima poslovanja internacionalizacija poslovnih

aktivnosti postaje gotovo nezaobilazan uslov za dalji rast i razvoj preduzeća.
Međutim, izlazak na međunarodnu poslovnu scenu najčešće zahteva da
organizacije izvrše određene promene u načinu na koji su do tada
funkcionisale. Jedna od oblasti koja zahteva izvesne promene jeste i oblast
upravljanja ljudskim resursima. Faktori koji uslovljavaju modifikacije u ovom
sistemu vezani su, pre svega, za pravnu regulativu drugih zemalja, ali i za
karakteristike nacionalne kulture. Ovo zbog toga što nacionalna kultura
ispoljava snažan uticaj na sistem vrednosti, stavove i ponašanje ljudi u
određenoj zemlji pa, između ostalog, i na preferencije prema politikama i
procedurama iz oblasti menadžmenta ljudskih resursa. Polazeći od
navedenog, rad se bavi analizom uticaja pojedinih dimenzija nacionalne
kulture na preferirani sadržaj menadžmenta ljudskih resursa u
organizacijama u određenim zemljama. Cilj rada je da se pruži teorijska
osnova koja će omogućiti organizacijama koje su internacionalizovale
poslovanje, ili to nameravaju da učine, da kreiraju takav sistem
menadžmenta ljudskih resursa u entitetima u inostranstvu koji bi, u
najmanju ruku, predstavljao balans između sistema koji se primenjuje u
sedištu organizacije i onog koji se preferira u entitetima u inostranstvu da bi
ovaj sistem bio efektivan.
Ključne reči: internacionalizacija poslovanja, nacionalna kultura,
međunarodni menadžment ljudskih resursa, zaposleni.

Author’s biography

Biljana Đorđević graduated from the Faculty of Economics in Niš 1992.

She recieved her M Sc (1998) and PhD (2007) at the Faculty of Economics in
Belgrade. She is an Associate Professor at the Faculty of Economics in Niš,
teaching the the following subjects Managing the Enterprises` Resources,
Human Resource Management, International Human Resource
Management and Career Management. She has published more than eighty
scientific and professional papers, university textbook Human Resource
Management (co-author) and monograph Career Success. Her fields of
interest include human resource management, career management and
managing the enterprises` resources.